Alchemist ARC eyes acquisitions via NCLT route

Alchemist Asset Reconstruction Co. Ltd is planning to focus on acquiring control of and restructuring stressed companies that have been admitted in the National Company Law Tribunal (NCLT) through the insolvency and bankruptcy code (IBC), said a senior executive of the firm.

Delhi-based Alchemist ARC is sponsored by Alok Dhir, managing partner of Dhir and Dhir Associates and Delhi-based NBFC DMI Finance. The ARC has former State Bank of India chairman Pratip Chaudhuri as its chairman.

“Our business strategy going ahead is to use our platform to combine financial strength with operational capabilities to acquire and restructure companies referred to NCLT under the IBC. It (IBC) has increased the business opportunities for ARCs as the decision making on stressed financial assets has been expedited and, fortunately, an exception has been carved out for ARCs from being treated as ineligible to submit a resolution plan where a connected party may be disqualified under section 29A,” said Srishti Dhir, president at Alchemist ARC.

Alchemist will tie up with strategic players with relevant industry and operational experience for acquiring companies through the IBC process.

“We are now looking to tie up with strategic partners who are having the operational capabilities to run businesses or identify independent professional management to enable us to acquire and operate the stresses companies. There is a big opportunity for specialized players such as ARCs to participate in the process, because of the sheer number and scale of stressed companies going through the process,” said Dhir.

Dhir added that Alchemist has already made a couple of such bids, along with strategic tie-ups. She added that ARCs can be a strong partner for strategic investors given their understanding of the IBC process and the related risks.

“Industry players may find it challenging to bid for distressed companies due to the risks and hurdles involved in insolvency and bankruptcy. But with the support of ARCs, there can be a huge scope for mergers and acquisitions and consolidation for specific industry players,” she said.

Dhir added that Alchemist is in the process of strategizing and shortlisting 4 or 5 sectors where it will focus our energies.

“Our current bad loans portfolio is spread across hospitality, real estate and all kinds of manufacturing,” she said.

The ARC is also planning to raise fresh equity capital this year to fund its growth plans.

“This year we are planning to privately place NCDs. We are also raising funds from banks. In the second half of the financial year, we will have a fresh round of equity fundraising. We have already had three rounds of equity fundraising since 2012. We are looking to raise at least Rs150 crore across debt and equity this year,” said Dhir.

Apart from looking at acquiring direct control of businesses through the IBC process, the ARC is also looking at growing its bad loan portfolio significantly this year.

“We are planning to increase our book quite substantially. Our gross NPA portfolio is around Rs 5,000 crore and we are targeting to double that in this financial year. Our AUM has increased by five times since 2014-15. Last financial year it grew by 50%,” Dhir added.

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